Yen Softens Amid Market Uncertainty on Fed Rate Cuts

The yen slightly weakened against the dollar amid reduced trading due to a Japanese holiday. Market participants remain unsure about the likelihood of a significant Fed rate cut. Last week saw market volatility over concerns about the U.S. economy, but ended with reduced bets on Fed rate cuts following strong U.S. jobs data.

The yen softened slightly against the dollar in Monday's trading, impacted by a Japanese holiday that thinned market activity. Market participants remain ambivalent about the chances of a significant Federal Reserve rate cut next month.

The week follows a tumultuous period that started with a massive selloff across currencies and stock markets, driven by concerns over the U.S. economy and the Bank of Japan's hawkish stance. Last week concluded on a calmer note, as Thursday's stronger-than-expected U.S. jobs data led markets to reduce bets on near-term Federal Reserve interest rate cuts.

Investors still question whether the Fed can afford to slow the pace of rate cuts, with pricing expectations indicating 100 basis points of easing by year-end, suggesting a possible recession. This leaves markets highly sensitive to upcoming data and events, including U.S. producer and consumer price indices due this week, a global central bankers' meeting at Jackson Hole, and earnings from Nvidia later in the month.

(With inputs from agencies.)